With a new year ahead and the holiday fanfare behind, this is a great time to set money goals, especially if you recently spent a lot on gifts and travel and want to get your finances in shape.
Right now, you may be highly motivated to solve every single one of your money issues in the next few months, but daily life is guaranteed to get in the way. Your financial to-do list, once so full of promise, can eventually get stuffed in the back of a drawer while you manage more pressing matters.
So how can you improve your odds of success? It comes down to accepting that you won’t have the time or energy to complete every task to perfection. Creating a system where you can prioritize, plan ahead and hold yourself accountable can help.
Consider unexpected high-impact actions
Many start by setting a goal to trim frivolous costs, which can certainly be helpful, but there are other ways to make a big difference. Taylor Schulte, a certified financial planner and founder of Define Financial, an advisory firm in San Diego, recommends starting with a few overlooked financial tasks.
Freezing your credit is a quick, easy way to guard yourself against identity theft. It’s free to do, and you can temporarily lift the freeze when you’re applying for a loan or credit card. Schulte also suggests looking into umbrella insurance, which offers additional coverage beyond what your auto, homeowners and other insurance policies provide. This coverage can spare you from massive out-of-pocket costs in the event you get sued.
Basic estate planning, including creating a will, is another thing to put high on your list. Putting off this task can create a major headache for your loved ones if something happens to you unexpectedly. “I know it’s a pain point and it’s often kicked down the road,” Schulte says.
Paying attention to your spending is always important, but don’t neglect taking steps to protect your money, yourself and your loved ones.
Focus on what actually matters to you
So many money goals are born out of social pressure. You “should” want to save up to own a home, even if you’re happily renting. You “should” sacrifice short-term needs and wants to stash away as much as possible for retirement, even though it leaves you feeling deprived. But money goals should be tied to the things that matter most to you. If they aren’t, you’ll quickly lose interest.
“If you don’t know what goals to choose, go back to your values and have them guide the goals you set,” says Eric Roberge, a certified financial planner and founder of Beyond Your Hammock, a financial advisory firm in Boston.
You can combine goal-setting with a little planning, so expenses are less likely to creep up on you throughout the year. Think about what expected costs will be coming up in the next six to 12 months, like recurring bills, vacations, anticipated home or car repairs, and other expenses. This approach allows you to set money aside each month to put toward planned costs, as well as longer-term goals.
Hold yourself accountable
Forgetting your goals can be far too easy, so to make something stick, write it down. It can be as simple as a handwritten list you keep on the fridge, or online calendar reminders that will nudge you every so often.
For time-sensitive goals, set deadlines. One tactic is to make multiple lists based on what you need to complete within the next week, month or three months. As time passes and you check off items, you can update the list.
Enlist others’ help, too. Weekly or monthly household money meetings are useful if you’re completing financial tasks as a group. Or share your goals with a trusted friend or family member who can serve as an accountability partner. Looping in loved ones can help keep you on track. “We don’t mind letting ourselves down,” Schulte says. “But we hate to let other people down.”
Recognize when ‘done’ is better than ‘perfect’
It’s easy to get stuck in decision-making mode when trying to pick a high-yield savings account, credit card or possible investments, but eventually, you need to make a good-enough choice. Taking action now can have more of a positive effect on your life than waiting until you’ve painstakingly considered each option.
Roberge says that though he’d prefer to optimize every financial decision, he doesn’t because if he did, he wouldn’t get things done. “Everything in moderation is one of the things that I live by,” he says. “Going to extremes in any one thing, at the detriment of other things that are important, doesn’t work long-term.”
This article was written by NerdWallet and was originally published by The Associated Press.